RE:RE:RE:RE:RE:RE:What if... I think this is what the market is missing most about the possibility of a recession. The macro oil picture indicates long-term demand/supply imbalance which would only be a slightly and temporary alteration in demand. This may mean $50 oil for a few months, but it's not going to impact the value of these companies long-term.
Make no mistake, the share price will fall if $50 oil came to pass it, but trying to invest based on the whims of the market and gyrating stock price is an impossible task. Investing in a company because there is long-term value is a much easier approach. This is an easy bet if you can look out more than a year into the future. If you are looking for instant massive gains, then the possibility of disappointment is high. Re-rating does tend to happen fast, and could happen very quickly, if a recession doesn't happen, which remains a very likely possibility. But trying to bet on when that re-rate going to happen it's a fools game.
I think there is a reasonable possibility that a recession doesn't happen at all. In fact, over the decades I have been doing this, it's when everyone is predicting something like a recession that it doesn't actually end up happening. Many of the most significant declines in stock prices due to concern about the economy came out of nowhere. They come at times when everyone is bullish and catch most people off guard including the pros. I think the broad market is currently discounting all stocks for the possibility of a recession that may not happen which means we are going to see the market turn very bullish at some point and it will happen quickly.
Either that or this is the most telegraphed and anticipated recession in history. If that's the case, then thr impact on this company will be marginal. The majority of her sessions over the past 100 years still experienced increasing demand for oil.
I think many investors are trying to time a swoon in prices due to recession. They are hoping for another 2020 event so they can put in all their cash and get rich. That is the nature of recent events. It biases our decisions and makes us act like they are going to happen again. However, I suspect we are near the lows for market prices in recent weeks. Even if a recession happens we may not see much cheaper prices and those market timers are likely going to be disappointed with how this ultimately unfolds.
JohnnyDoe wrote: All of WCP, CPG and BTE have made significant acquisitions that involved going from a near clean balance sheet to jacking debt. I bailed immediately on WCP. With CPG and BTE I find the mid term value is compelling. Longbterm is outrageous.
Yes obviously a recession can happen but that doesn't necessarily mean 50 dollar oil. There's been fairly significant inflation in the oil patch and I don't think many of them in North America are profitable at 50. 50 dollar oil will lead to shut ins in north America but before it gets to that, I think OPEC cuts production to support oil. OPEC doesn't have much choice, their economies are too dependent on oil and they need revenue to diversify